Why a Six-Figure Salary No Longer Means You’re Rich • Hacker News Board

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#81

Post by humanrebar » Thu, Aug 21, 2014, 4:01 PM UTC

ccallebs wrote: post #73

humanrebar wrote: post #56

Earlier quoted context omitted.

> I grew up (and now live) in rural Appalachia... In most areas of the U.S., a six-figure household income is enough to have a warm place to live and healthy food to eat.. I completely agree with everything you wrote. I grew up in a rural community, too. I see how DINKs overspend on things they "need" all the time. However, something you're missing is the safety premium. Often it's not possible to live modestly in a…

I agree with you. But with many people, I would classify the safety premium with the other things that those people "need". When I first arrived in Austin a few years ago, so many yuppies told me to NOT go east of I35. They were paying outrageous sums of money (actually quite tame by San Francisco standards) to live far from the side of town they perceived as dangerous. However, once I became acclimated to the city,…

I share the same sentiment regarding prejudice and snobbery. But safety and cleanliness are certainly needs. I think they are taken for granted by rural folks who don't really have neighborhoods as such so they they can (for the most part) trivially avoid crime (don't hang out with meth heads and drunks).

In urban areas, price and crime rate are inversely correlated. See also commute times and school quality. Usually the heads of households have to make significant trade-offs to save money on housing (usually the single biggest budget item). Not that they don't in rural areas, but the tradeoffs are of a completely different kind (access to high speed internet, paved roads, cell phone reception, downwind from a hog farm, etc.).

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#82

Post by humanrebar » Thu, Aug 21, 2014, 4:06 PM UTC

reustle wrote: post #40

lnanek2 wrote: post #15

Earlier quoted context omitted.

What if your job is in Manhattan where that means you are making negative income vs. your rent? And a good meal is ten times more than a beef soup shop in Taiwan? Or spending 2 hours every morning commuting into the city and back out on a bus to somewhere you can afford on $50k/yr? Is that still rich?

I've lived / worked in midtown Manhattan on both $35k/year and $90k/year (and between) within the past 3 years, and they are both doable. At 30k, I wasn't rich for sure, but I wasn't poor either. Still going out to eat mostly, and not missing out much with friends. As it got closer to 90k, things got easier for sure. I'm not married, so no dual income, but my total monthly expenses come out around 2k (rent, good food…

> I'm not married So having roommates was an option. And you didn't need another bedroom for the kids. Your housing costs were far below those of an average family. Which is sort of the point of all the comments about dual incomes being required.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#83

Post by geebee » Thu, Aug 21, 2014, 4:07 PM UTC

turnip1979 wrote: post #74

geebee wrote: post #69

Earlier quoted context omitted.

True, but keep in mind, 100k is a lot easier to achieve in those cities. Registered nurses and dental hygienists (and software developers), who all earn about 110k a year (median) in SF, tend to fall well below that threshold outside these centers.

Hygienists make 110K in SF? Do you have data to support this? These seem like outlier numbers to me even in a place like SF.

it surprised me too.

http://money.usnews.com/careers/best-jobs/dental-hygienist/s...

Personally, I'm glad dental hygienists make enough money that, with two incomes, they can live a middle class life where they work. But it really does put that "critical shortage of software developers" at an average of $110k a year in SF in perspective.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#84

Post by smackfu » Thu, Aug 21, 2014, 4:21 PM UTC

umeshunni wrote: post #79

humanrebar wrote: post #64

Earlier quoted context omitted.

If you own a family home in some neighborhoods, you have a million dollar net worth. Even if you inherited it from your folks and minimum wage goes to property taxes instead of rent. Granted, you could sell the home and join the regular rat race with everyone else, but what's the point of being frugal if you can't leave the surplus to your kids?

Most net worth calculators (e.g. to be an accredited investor) exclude the equity in your primary residence.

Which doesn't exactly make a ton of sense, unless you are trying to restrict to liquid assets.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#85

Post by TheCoelacanth » Thu, Aug 21, 2014, 4:24 PM UTC

ccallebs wrote: post #68

geebee wrote: post #63

Earlier quoted context omitted.

This comes up a lot. Sometimes they talk about a car, for a while there it was always a "plasma tv". Financial advisors, talking about middle class debt and financial struggles, would ask you, do you really need that "plasma tv". San Francisco is probably an outlier, but with the median house price at 1.1 mil, and full time child care costs for two preschool kids at $40-50k a year, a plasma tv is a minor rounding err…

San Francisco, Manhattan, D.C. -- they're all outliers. My great-aunt runs a day-care facility in Kentucky. They charge $200/month/child. (This is definitely an outlier on the other end of the spectrum) It's very difficult to talk about wealth, as wealth means different things in different places. My argument for a $100k/year salary being "rich" falls apart in expensive cities.

> My argument for a $100k/year salary being "rich" falls apart in expensive cities.

The vast majority of jobs that pay $100k/year are in expensive cities, so you can't just ignore the expensive cities.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#86

Post by ohhoe » Thu, Aug 21, 2014, 4:31 PM UTC

aet wrote: post #39

lnanek2 wrote: post #15

Earlier quoted context omitted.

What if your job is in Manhattan where that means you are making negative income vs. your rent? And a good meal is ten times more than a beef soup shop in Taiwan? Or spending 2 hours every morning commuting into the city and back out on a bus to somewhere you can afford on $50k/yr? Is that still rich?

Living in Manhattan (or SF or whatever) is a "luxury" -- move to Atlanta where you can buy a 1 bedroom condo in the city w/ loan at $750 a month.

You do realize a 100k salary in Manhattan would likely be more around 55 - 60k in Atlanta, right?

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#87

Post by davidf18 » Thu, Aug 21, 2014, 5:07 PM UTC

msandford wrote: post #55

applecore wrote: post #30

Earlier quoted context omitted.

Housing supply isn't fixed. When house prices go up, people build more houses.

Which makes substantial profits for the home builders but very little in the way of more affordable housing. The price of a barrel of oil is determined by supply and demand. As the price goes up, more production is brought online which is now economically feasible. So at $100/barrel you've got the Canadian tar sands projects which make oil for something like $80 a barrel worth of cost so the company can make $20 a ba…

The increased housing prices are caused by "rent seeking" by wealthy landlords (think people who own hundreds of rental units for example) that want to increase the value of their property. They do this through zoning ordinances that artificially restrict zoning density and also through overuse of "historic preservation" laws. See Harvard economist Edward Glaeser's writings for more details. He very clearly demonstrates the increasing cost of land and as distinct from the cost of construction.

It is important to understand this reason, "rent seeking" in microeconomics makes for market inefficiencies. It is a means for people to enrich themselves through politics by making people pay more for rent or for buying a house instead of through actual wealth creation. The solution to the ever increasing housing prices is to reverse the "rent seeking" by fixing zoning laws so that there are not unfair zoning density restrictions and restricting the overuse of "historic landmark" laws.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#88

Post by aet » Thu, Aug 21, 2014, 5:19 PM UTC

ohhoe wrote: post #86

aet wrote: post #39

Earlier quoted context omitted.

Living in Manhattan (or SF or whatever) is a "luxury" -- move to Atlanta where you can buy a 1 bedroom condo in the city w/ loan at $750 a month.

You do realize a 100k salary in Manhattan would likely be more around 55 - 60k in Atlanta, right?

I guess my point is you can buy a 1br condo in Atlanda w/ 55k, you can't buy anything w/ 100k in Manhattan.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#89

Post by otoburb » Thu, Aug 21, 2014, 6:42 PM UTC

smackfu wrote: post #72

otoburb wrote: post #61

Earlier quoted context omitted.

It is problematic for dual-income households with kids. In these situations, kids are raised by a combination of: 1) Extended family (typically retired grandparents) 2) Daycare / child-care / "school system" 3) Private child-care (e.g. nannies or babysitters) #1 is cheapest, but ties the family down to where the grandparents are. Both parent jobs need to be located relatively close by. #2 typically take a huge chunk…

>#1 is cheapest, but ties the family down to where the grandparents are. Both parent jobs need to be located relatively close by. Also, it's kind of shitty to your parents. Is watching your kid from 9-5 on weekdays really what they wanted to retire for?

Yes, it is a bit of a burden for the grandparents. I hear that this is sometimes alleviated by using grandparents on both sides of the family, health permitting (/anecdata).

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#90

Post by ChuckMcM » Thu, Aug 21, 2014, 7:54 PM UTC

geebee wrote: post #59

jawns wrote: post #10

As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of (material) richness. For instance, you might have a family with a sole breadwinner who has a low six-figure salary, but that has to cover all the family's expenses. Meanwhile, even if his neighbors, a dual-income household, both earn less than him, their household incom…

I think there are a couple of factors you're overlooking. Consider the case of a dental hygienist married to a nurse. In SF, they both earn about 110k a year. So $220k is a high salary, comparable to a physician in a modestly paying speciality. Here's the thing... I think payroll deductions apply to the entire 110K of each dh and nurse's salary, but only the first $110k of the physicians salary. However, the second s…

In progressive tax situations that is called the 'marriage penalty' (second salary is all taxed at the higher marginal rate) which is mitigated somewhat by changing the tax thresholds for married people filing jointly. You can file separately of course, and it seems a number of people are living together and filing as individuals, it gets complicated as you get kids because they become dependents (and a tax credit) on one of the people's return.

There is a reason all this stuff keeps a legion of tax attorneys and CPAs employed.